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To: John Biddle who wrote (31094)	1/13/2003 7:31:07 AM
From: John Biddle	Respond to of 197056

Welcome To Babelonia The ministry tries to pacify cellcos but they and their pet peeve, WLL operators, stay at loggerheads More Coverage outlookindia.com For two years running, limited mobility has triggered unlimited acrimony in the telecom industry. But today, while the issue remains in the courts and the two factions are busy garnering support, is communications minister Pramod Mahajan trying to put his weight behind cellular operators? The minister recently went on record issuing a stern warning to WLL operators saying that all those willing to offer unlimited mobility will have to shell out additional licence fees and become the fifth or sixth operator in circles. For this, licence fee would be frozen at fourth-round rates. He also pointed out that this could actually be a precursor to unlimited competition in each circle. Camp Cellular isn't exactly pleased with this sudden support. Nor are they willing to bite the carrot. Says a service provider, "Isn't it obvious one has to pay the fee to offer the service? So what new is he saying?" A senior COAI (Cellular Operators' Association of India) official explains: "WLL operators are anyway not allowed to provide unlimited mobility. The actual question is why should fixed operators be allowed to provide mobile services even if it is limited?" Analysts like Sanjay Mehta, head of telecom practice, Ernst & Young, sees it differently. For him, the need of the hour is to resolve the prolonged WLL imbroglio and move ahead. Says he: "As a principle, if cost base for licence fee can be equated to settle the level playing field, we should move to such a regime." The ace the cellcos are holding on to is interconnect which is eroding WLL players' value proposition. The prospect of unlimited entry is also raising eyebrows. Cellcos fear it could seriously dent their bottomlines and their fears are not unfounded. With four players in each circle, it's a bloodbath out there with accumulated industry losses currently above Rs 8,000 crore. By the end of 2002-03, this could well go beyond Rs 10,000 crore. Says Sean C. Dexter, MD, Spice Telecom, Karnataka: "It's a very unhealthy situation even for fixed-line operators. If we have more than four players, we can expect churns within a year and come back to four again." Cellular service providers highlight that unlimited competition is unprecedented anywhere in the world. Says T.V. Ramachandran, COAI secretary general, "On an average, there are three to four players per circle across the world. Anything more than that is unsustainable." Their worries have compounded as tariffs—particularly long distance—have hit rock bottom even by international standards from Rs 24 to Rs 9 in 2002 on to Rs 2.99, circa 2003. The regulatory costs and duties on infrastructure and handsets, however, remain comparatively higher. The WLL players may not be averse to these proposals and may have very little to lose even if they have to pay an increased licence fee. Reliance sources have indicated that chairman Mukesh Ambani is keen on shelling out the additional fee to get things going. For a cash-rich company like his, an extra Rs 1,500 crore is loose change. After all, they have a project outlay of Rs 25,000 crore and have paid just Rs 495 crore as a fixed line (read basic) or WLL licence fee. Moreover, contrary to the earlier positioning of the government, Mahajan is equally confident that spectrum allocation will not be a headache once new players step into the field of "unlimited competition". According to him, spectrum—till recently a scarce and expensive resource—is actually in abundance. The industry could not disagree more. Says a top Delhi-based cellular executive, "It is inexplicable.